The future of the historic Harland & Wolff shipyard is in jeopardy following a $25 million emergency bailout, raising fears that Royal Navy vessels could soon be constructed abroad.
The Belfast-based company, renowned for building the Titanic, has scrapped its planned restart of ferry services between Cornwall and the Scilly Isles, instead choosing to concentrate on its core operations across four main shipyards in the UK.
Harland & Wolff, which has shipyards in Belfast, Appledore in Devon, Methil, and Arnish in Scotland, announced the decision to cease non-core activities after securing crucial funding from Riverstone, a Wall Street credit investor. The company stated: “It is regrettable that we have taken the tough decision to terminate the fast ferry, but we need to focus our energies and resources on continuing to grow the core business across our four delivery centres.”
The bailout news came with the immediate resignation of John Wood, the company’s chief executive. Harland & Wolff has been propped up by $100 million in loans at a steep 14% interest rate from an American asset manager, and Rothschild & Co has been enlisted to explore strategic options for the company.
Despite these efforts, the financial instability of Harland & Wolff casts doubt over its ability to fulfil a £1.6 billion Ministry of Defence contract to build three military vessels. This situation raises the possibility that these ships could be constructed by a Spanish shipyard, marking the first time in Royal Navy history that warships would be built overseas.
Malcolm Groat, the chairman of Harland & Wolff, expressed gratitude towards their lenders, stating: “We are grateful to our lenders for their continued funding commitment to support Harland & Wolff Group’s stabilisation and long-term strategy objectives. We also look forward to working with the very experienced team from Rothschild & Co to help us achieve that objective.”
Last month, the incoming Labour government declined to support a taxpayer-funded bailout for the shipbuilder, which had its shares suspended on Aim, the junior stock market, after being bought out of administration five years ago.